Evaluating A Real Estate Investment Deal

We talk with lots of people looking to buy real estate investment properties in Dallas Fort Worth and the surrounding areas. Some of them know what they’re doing when it comes to evaluating a real estate investment deal… and some of them are still in the learning process.

But, since our entire business is finding great deals at deep discounts… and often passing those deals onto real estate investors like you… I thought it would be a great idea to share with you some resources to use for evaluating a real estate investment deal. This works in any market… Dallas Fort Worth, surrounding areas, TX, any other states across the country.

When you really boil it down… evaluating a real estate deal is a pretty simple process. If you’re looking to buy real estate as an investment, wholesale properties, hold them for rent… whatever, one of the most important parts is “buying it right” (i.e. – not overpaying).

So lets dive in.

What Goes Into Evaluating A Real Estate Deal – (for single family houses)

There are just a few main elements when you’re evaluating a deal.

Cost of repairs needed to get it back up to good condition

The after repair value (ARV) of the property (what it’s worth and can sell for today once it’s fixed up)

If you’re going to buy and hold for a rental… you need to know what you can rent it out for and what your “debt service” (mortgage payment) will be. Knowing this makes sure you’re buying so the property cash-flows each month

There are other things you can (and should) look at too… but those 3 are the main important things to look at first.

Cost of Repairs

One of the things you should do when you are looking at a property is to find out how much it’ll cost you to fix it up to a point where it’s in great shape. In other words, the cost of repairs. This could be a new roof if it needs it, carpet, paint, a new kitchen, yard, maybe even more.

To find a good estimate of the cost of repairs, the best advice we have is to get to know a contractor or two in your area and have them walk through the properties with you the first few times… have them quote out the repair cost… and build that into your offer.

Here’s a cool free tool for helping you evaluate your repair costs as well as prepare a Private Lender package called RehabValuator. https://tvallc.isrefer.com/go/RehabLite/MasterRE/. Check it out and see what you think… it’s free.

After Repair Value (ARV)

This is simple, but many investors get stuck on this part. This is essentially what you could sell the property for today… after you repaired it and brought it up to a great condition. This is found by finding out what other similar houses in the same area are actually selling for. NOTE: Don’t look at the “Listing” price… look at what houses similar to yours have actually SOLD for in the past 3 – 6 months. This helps you determine how much you could actually sell that house for if you had to… right now. You never want to overpay to a point where you can’t sell it for a profit in the next 3 months.

How do you find this? The best comps come from the MLS system which is accessible by realtors and appraisers. If you do not have access to MLS talk to a Realtor that you know… or an appraiser. Heck, if you don’t know one… call up a few today… tell them you have a property that you’re potentially going to sell in the near future… and ask them what they think it should sell for. The problem here is you are controlled by the realtors time available to pull comps for you. Better yet, if you are investing in Texas you can also pull your own MLS comps using the following services. They don’t allow you to access MLS however they pull comps data from MLS and send it to you and are “MUST-HAVE” tools for your REI business. Real below.

MLS Deal Finder – Emails of newly listed deals on MLS along with comps to go with those deals. Get a 7 day Free Trial and Use Promo Code is “WestDFWREI” for 25% off your subscription for life.

FastCMA– Now available to pull your own true MLS comps for all your Texas investment property deals, AND delivers motivated seller leads daily for pre-foreclosure, probate, tax liens, and evictions, all to your inbox daily. Start your 7 day Trial for $1.00 and Use Promo Code “WestDFWREI” for 25% off your subscription for life.

So, you’re going to buy and hold properties for rental? Great! You don’t need to worry about what it’ll sell for right away. What you need to know is if it’ll pencil out on a month to month basis. You know… cash flow.

So, talk to a mortgage broker (or a private lender) and find out what the monthly mortgage payment will be for that specific property.

Then find out what you can rent the property out for on a monthly basis.

Then, you work backwards… and find out at what purchase price your mortgage payment will be low enough so you can make the monthly cash flow you need to make on the property. Be sure to figure in other expenses too like property taxes, maintenance expenses, property management fees, and keeping money in reserves for future repairs.

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Hear What Others Have To Say…

All Wholesale Properties

Working with TMC Property Solutions was the best decision we made. Thanks to Tim and his team at TMC Property Solutions, we were able to stop our house from going to foreclosure and damaging our credit. We had lost our local jobs, accepted a new job out of state, and were in default several months, heading towards foreclosure fast! We did not want to have a foreclosure on our credit for the next several years. Tim was able to create a solution and stop the foreclosure the day before the sale date, even though the house needed some minor repairs. Tim completed everything he said he would and made the process simple and easy to understand. We are very pleased with TMC Property Solutions and their professionalism for helping us stop our house from foreclosure!

We would highly recommend Tim and TMC Property Solutions for anyone needing to sell their house fast to prevent foreclosure or any other circumstances!

Jonathan & Iris A.

All Wholesale Properties

I want to thank TMC Property Solutions for the quick sale of my home. It was a smooth transition with no strings attached. Walked through each step of the process with knowledge of what will take place. Closing wrapped up in about 2 weeks. Check deposited. Freedom from debt. Thanks again for your help!

Marcia (Lisa)

All Wholesale Properties

inherited a property in Granbury Texas and wanted to sell it quick and get the matter resolved. I did not want to have to worry about more costs and expenses. That’s when I decided to reach out to Tim at TMC Property Solutions. Thanks to Tim, Erika and his team at TMC Property Solutions, they were able to help me and take over my payments on my house with no hassle. Tim completed everything he said he would and made the process quick, simple and easy to understand. I am highly satisfied with TMC Property Solutions and their professionalism for helping me get through my situation. I’m also thankful for Tim taking the time to explain the process, which was very simple, for taking the time to answer my questions, and to help support me and my needs. I would highly recommend TMC Property Solutions for anyone needing to sell a house fast!

Bill

All Wholesale Properties

My wife and I purchased our new home recently. Closing on our new home was a catastrophe, it took 12 weeks!!! Although this was completely due to the finance company, we did not want to chance another drawn out affair and the thought of making house payments on a home we did not live in until it sold was troubling. I had seen Tim’s truck from TMC Property Solutions around town so I called him out of the blue. He quickly responded to me with several offers and we came to an agreement on the spot. There was always an open line of communication and we were kept updated at all times. After the first meeting we closed in short order. I feel that Tim along with the work of his very pleasant team saved us several thousands of dollars that we would have spent on mortgage payments, electricity, water, taxes, etc. TMC Property Solutions comes highly recommended from us.

Jim and Lee R

All Wholesale Properties

Recently my wife and I purchased our dream home. After a series of life circumstances we could no longer afford to keep up and soon fell behind on our mortgage payments. We were headed to foreclosure but thanks to Tim and his team at TMC Property Solutions, they were able to helps us avoid foreclosure and sell our house very fast. Tim made it amazingly easy to understand the process from start to finish and then completed everything he said he would, in a very short time. We are very pleased with TMC Property Solutions and their professional service, Tim’s team went well above in keeping me informed on everything and since I was out of state they did everything possible to make this process as headache free as possible. Tim took the time to help support our family and our needs. We highly recommend TMC Property Solutions for anyone needing to sell a house fast!

We are the premier Fort Worth house buyer, offering deeply discounted deals all across the metroplex. We either own or have all houses under contract listed on our website. All properties are sold for cash or hard money. It is the buyers responsibility to do your own due diligence and verify all information before signing our contract. We are happy to provide COMPS on any of our deals if needed. Prices are NET to seller with buyer paying ALL closing costs. Opinions of current or future market value / rents are given as a courtesy and no guarantees are expressed or implied. Our properties move fast so contact us NOW if there is a property you want to purchase before it’s gone. We look forward to doing business and making a lot of money together.

P.S. Be sure to visit our Investor Resources page often for the latest and greatest tools to help you grow your business and be sure to join our buyers list to receive notice of our deals.